Last week one of my friends was talking to me about her weekend filled with her perceived much needed bout of “retail therapy”. She talked about all the new clothes and shoes, and even more clothes that she bought! She upgraded her iPhone to the latest version and she even managed to go out to both lunch and dinner twice!
We both know what happened after. I completely lost it! “Are you nuts?!” I exclaimed, “I cannot believe my ears!”. She smiled and retorted in sarcasm, “I know… I know… I went a little overboard, but I work hard so I deserve it!”. Ironies abound, what she didn’t realize was she was about to start working even harder just to cover the costs of all of these material possessions. Believe me, I was once in this trap for several years of my life… I know this situation all too well.
After some coaxing I convinced her to reveal the details of her purchases over the weekend so that I can create a case study to present back to her (I got her permission to post it to my blog as well). I just couldn’t take it that she was about to set herself up for decades of suffering and I had to at least try to pull her out of the trap of first-world slavery (self-inflicted by the lust for unnecessary physical possessions).
Here’s what her expenditures looked like
|Dinner & drinks||$54.32||Dinner + 3 drinks|
|Clothes||$327.19||Several shirts, a few pairs of pants|
|Lunch||$26.56||Lunch + 1 drink|
|iPhone 5||$276.84||Prepay iPhone + reserve charger (3 year plan)|
|Dinner & drinks||$85.42||Dinner + 3 drinks|
|Nightclub||$53.23||3 drinks + taxi|
|Coffee & snack||$8.76||Coffee + snack|
When I revealed to her the total of her weekend’s expenditures she laughed, literally thought I was joking… until she took a look at the tally. Her demeanour slowly changed and she shrieked “Oh my gosh! I only clear $1,150 a paycheque or so!”. Her weekend of fun didn’t seem as fun anymore. I had ruined it for her.
Being the straight-shooting guy that I am, I still wasn’t willing to let her off the hook that easy. I asked her a few other straight pointed questions such as “How much clothes do you have?” to which she smiled and replied “Shut up!”. “And how about shoes?”. To which her politeness truly started to shine as she retorted “Eat shit!”. Finally I asked, “Do you ever eat at home?” and her response is not even suitable for me to type up so you can only imagine what she said.
It was clear to me at this point she was outright mad… but not at me. She was mad at herself. She realized that this so-called “lifestyle” of hers was just not sustainable. She shouted “I know… I just need to make a higher salary, I’m going to look for a new job!” My hearty laughter that filled the room now redirected her anger towards me. “Uh oh” I thought to myself. Luckily her anger turned to forfeit as she realized it was an infeasible solution to her problem. Deep down inside she knew that if she found a new job, even with a healthy raise, it wasn’t going to be enough to sustain a lifestyle like this.
She was hardly talking so I figured it was time for me to help her put her thoughts to rest. “Why don’t you look at things a little bit differently? Instead of purchasing based on simply wanting something, why don’t you think about it in terms of how happy it makes you and how much time it takes you to acquire it?” She looked at me puzzled and I continued to explain. Think of purchases as investments in your sustainable happiness, not instant gratification. Then I showed her how to measure it.
In order to determine how much time it takes to purchase something you need to figure out how much you make each hour after taxes and fees. In her case, she makes $21.53 an hour, but after taxes/CPP/etc. she only clears $15.33 an hour. Then I told her to determine if it’s worth it to her to work that many hours for the product or service. Here’s what the new chart looked like:
|Dinner & drinks||$54.32||3.5 hours||No|
|iPhone 5||$276.84||18.06 hours||Yes|
|Dinner & drinks||$85.42||5.58 hours||No|
|Coffee & snack||$8.76||0.58 hours||Yes|
Seeing those results literally made her gasp! She had worked almost two full weeks just to cover the expense of an evening and two days! In fact, the last entire week of work alone barely even covered the cost of the clothes and shoes! So *not* sustainable!!!
After we filled out the chart together, she decided only two of the items were worth it to her. Her beloved new iPhone and her coffee and snack on Sunday morning. I reminded her that her phone has an ongoing monthly fee of $101.70 after all taxes are included so for the next 3 years she would be stuck exchanging 6.63 hours every month in order to use the phone. She still felt it was worth it and that’s fine. This made a lot more sense to her and she exclaimed “Oh my gosh, Brent, I can’t believe I’ve been spending so much for so little!”
I jumped in again and exclaimed “I’m not done yet!…” I just had to offer more advice and reminder of alternatives – afterall I wasn’t telling her not to have fun, but to change the way she does it! “Next weekend I want you to go out and buy two bottles of wine for $20 instead of spending over $100 on drinks out at restaurants and clubs, cook your meals at home and take turns with your girlfriends, and if you want to go out to a restaurant then at the least be price conscientious when choosing your meal… oh and have a drink with your girlfriends before going out to the restaurant. Oh and for crying out loud, stop buying more damn clothes, shoes and purses! You’re working 6 months of the year just to have new clothes, if you invested that money instead you’d shave 20 years off your working!”
She’s made the decision that she will now be following this approach, exchanging her money for happiness, based upon deciding if it’s worth the expenditure or not. What results will this discussion have had on her? Will it leave a lasting footprint or will she choose to forget. I’ll check in within a few months and I’m hoping for the best. Can she be cured of first-world slavery? Only time will tell…
By taking this approach in my life I’ve literally shaved 20 years off of my required years to work, it truly works and will work for anyone who takes this approach. Only you can decide what is more valuable to you – your time or physical possessions. Every purchase you make you are essentially exchanging time for possessions. Which possessions are you willing to give up in order to give yourself more time to enjoy life?
Founding Partner, Amplified Investments